University students head back to campus this month but before you, as a parent, breathe a collective sigh of relief, you need to ensure that your children’s valuables have been properly insured.
Attie Blaauw, head of personal lines underwriting at Santam notes that no matter how comprehensively your house contents is covered, electronic equipment or any valuable possessions that are ‘on the move’, will not typically be covered by your insurance policy. “The premiums of a household insurance policy are determined by how secure the house is, for instance, whether it is in a secure estate and whether the property has burglar bars etc. As soon as the equipment is off the primary residence premises, it should be insured differently,” he cautions.
Mandy Barrett of insurance brokers and risk advisers, Aon South Africa, says there is a common misconception that the contents of students’ residences are uninsurable because this is regarded by insurers as a “communal area”, and therefore presents a much higher risk. “While this may be true in some cases, particularly with off-the-shelf, commoditised types of insurance products, it’s quite possible to arrange affordable cover for these risks linked to your household contents or vehicle cover. However, you can expect this cover to be subject to certain insurer restrictions such as forcible and violent entry,” she says.
Barret points out that a potential pitfall to watch out for is that where the value of an item specified in the policy is not listed at its replacement value. “If this is the case, you could find the insurer only partially pays out in the event of a claim on the basis that the item was under-insured,” she says. A good practice is to make photocopies of receipts for high-value items such as laptops and bicycles that you have an electronic copy of your proof of purchase. Bear in mind that the replacement costs are likely to escalate over time and the replacement values on your policy should be updated each year to allow for inflation.
High cost items
Typically, a student’s laptop could cost anything from R4 000 to R23 000, a tablet between R1 000 and R9 000 and a smartphone between R1 300 and R11 000. “Textbooks can set a student back up to R7 000 per semester. And many students travel by bike, an inexpensive mode of transport – except for the set-up fees which can go as high as R20 000 depending on the model,” Blaauw says.
Remember that while your insurance premium may increase slightly to cover specified items, it is well worth it when it comes to claims time and avoiding costly repair or replacement charges.
If your child is fortunate enough to drive a car, it is important that the insurance policy on the car specifies that the child is the regular driver. Neethling notes that this applies to children who live at home and drive to campus daily as well as those who live at campus.
This is particularly important because if the regular driver is not correctly or truthfully declared in your insurance policy and a different individual who drives the vehicle regularly is involved in an accident, your claim may be rejected or not paid in full.
“When it comes to insuring a student vehicle, make sure you have cover at least for balance of third party, fire and theft, with, perhaps additional personal liability top up cover, given the risk of major claims in the event of an accident or incident where the young driver is proven to be negligent,” Barrett says.
Nthabiseng Moloi, head of marketing and brand at MiWay, agrees, saying that if you have failed to correctly specify the regular driver on your car insurance policy, the insurer has the option to void the cover as though you never had a policy in place. This is because the incorrect information means that your risk cover was incorrectly assessed and you would have been paying the incorrect premium. While it might be tempting to choose this option so that you have a lower premium, it is not worth the risk of losing your cover entirely.
- This article was first published in Finweek on 8 February 2017.